Tuesday, November 10, 2020

Most good innovation is offensive

 If you are a football fan, the way I am, you know the old adage:  defense wins championships.  For years, decades even, defense held sway in the coaching ranks.  Everyone seemed to believe, and it was often proven out, that the teams with the best defense would win the championships and the Super Bowl.  There's another phase you'll often hear:  the best offensive is a good defense.

With this in mind, many teams and coaches built strong defenses and just OK offenses.  Over the last decade or so, however, rules were adjusted and new offenses emerged that proved that good offenses will often beat good defenses.  No longer is football a game of "three yards and a cloud of dust". Even in the college ranks we are seeing games where the aggregate score is often over 80 points in a game.  Needless to say, good offenses (and the rules changes that made them possible) now hold sway.

This represents a classic tension, between a proven, safe, conservative approach and the more aggressive, risk taking approach.  Strong defenses and safe, patient offenses are the conservative approach, winning with better field position and stopping the other team's offense.  Most coaches and teams have practiced a conservative brand of football. In the same fashion, many corporations play defense, and have very conservative management philosophies.

How executive management is like football coaching

While many coaches in the NFL are happy to manage the game, control the other team's offense and work their way patiently down the field, winning with small margins and field position, the same can be said about many executive teams in corporations.  The game is actually easier to play in large firms, because the bar for "winning" is set by the company through a whisper campaign about revenue and profits.  Then, the company merely needs to meet the goals it has set for itself.  You'll rarely see a company miss its numbers to the good or to the bad to any great extent.  If a company is going to exceed its numbers, it will hold some of that revenue back for the next quarter, just in case.  A company that cannot meet its own whisper numbers over several quarters (outside of an epidemic like COVID) will soon have a new management team.

With this in mind, it pays to play it conservative and safe, building on existing foundations and rarely straying from safe models and channels.  In other words, managing like a defensive minded coach in football.  So you can see why most innovation is incremental, building on existing products and channels, rather than disruptive or transformative, because that innovation becomes offensive and risky.

Why innovation is offensive

Innovation seeks new opportunities, to address emerging needs, customer and markets.  It is inherently aggressive, risky and growth oriented.  Rather than building on existing foundations and channels, it seeks to create new opportunities and new ways to engage with customers.  Therefore, it is offensive-minded, and runs head-long into a defensive minded mentality in many corporations.

Which is why I say innovation is often offensive (in multiple senses of the word).  It is offensive rather than defensive minded, meant to win new markets and opportunities rather than protecting and defending existing turf.  It is offensive to those who prefer a more defensive mindset, because it introduces risk and uncertainty.

Why the NFL changed

The NFL looked around about a decade ago and realized it was losing viewers to other faster paced, higher scoring sports like basketball.  Defensive games where the teams push each other around in the middle of the field may be tactically interesting, but fans want scoring.  New players and new rules have created the opportunity for far more scoring.  In the NFL, becoming more offensive minded was a reaction to the marketplace.

In corporations, there is a strong preference for managing and controlling, playing it safe, so a strong bias toward defensive-minded thinking.  While the market does reward innovators - those who are more offensive minded - the risk to reward ratio is not large enough for many firms and executives to shift their thinking.  Most true innovators in the corporate world come from the two ends of the success spectrum:  they are either far ahead of competitors and can afford the risk, or behind competitors and risky actions are all that's left.

Why companies remain defensive minded

And the key point in that last paragraph is "shift their thinking".  An NFL team needs only a new coach or owner and a few new players to shift the emphasis from defense to offense.  A corporation needs a shock to its systems, a top down philosophy change that changes not only management and compensation but also the inherent culture.

And if culture is a determinant for innovation, then it should be relatively easy to see which firms can innovate or have the capability to make shifts to more offensive minded thinking, and which will remain defensive minded until forced to change.

Further, being defensive minded is easier and more straightforward than being offensive minded.  In a defensive stance, you must defend what you already have, protecting familiar customers, markets and channels.  You compete on ground that you know.  In an offensive action, you compete on new ground, with new competitors and for new customers that will be unfamiliar to you.

Lastly, inertia makes it easier to compete over the same ground and for the same customers rather than reaching new markets and customers.  At some point in every company's life, the legacy of past experience and the amount of inertia that builds up makes it difficult to do new things.

Innovation can be offensive

For these reasons and many more, I think good innovation is often offensive.  Disruptive and Transformative innovation seeks to solve unmet needs or address customers who aren't happy with existing products and services, or who aren't served at all.  That means going beyond merely protecting the status quo.  It means going on the offensive.

And, since innovation introduces risk and uncertainty, the mere action can be a bit offensive to those who prefer safer bets and less risk.

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posted by Jeffrey Phillips at 10:19 AM


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